Oil and gas report shows scale of job losses in UK industry but experts see positives for the East of England

Centrica's Audrey platform in the southern North Sea off the coast of Norfolk is due to be decommissioned. Picture: Centrica

Centrica

The scale of the damage done to jobs in the oil and gas industry as a result of low oil prices has been revealed in a sector report.

But experts in East Anglia say it is not all doom and gloom as the region is well placed to benefit from changes in the industry.

Trade body Oil & Gas UK (OGUK) said it expected to see a slowdown in the number of jobs lost in the sector in 2017 after 2016’s figure of 60,000 came in at three times its original prediction. Its economic report predicted only 13,000 roles would be cut in the next year.

Despite challenges, the Department of Business, Energy and Industrial Strategy (BEIS) believes oil and gas will still make up two-thirds of the overall primary energy mix in 2035.

Simon Gray, chief executive of East of England Energy Group, said the region’s specialism in gas meant the downturn had been less keenly felt than other areas and added the variety of services in East Anglia meant there was still a significant part to play in the coming years.

Mr Gray said a discovery of hard-to-access “tight gas” means the southern North Sea (SNS) is being looked at as “a very good prospect”.

“While everyone has been badly impacted by the oil and gas prices it has not been as bad here as in Aberdeen,” he said. “Our supply chain has been quick to respond and to transfer skills to renewables.

“I think we will see more collaboration between oil and gas and offshore wind which will reduce costs and extend the life of gas platforms.”

Mr Gray said natural gas will play an important part in the fuel mix in the future – particularly as a transition fuel as the UK moves to burning no coal by 2025. Another area the East can exploit is decommissioning, which was the only part of the industry to see an increase in spending.

It comes as Centrica announced proposals to launch a multi-million pound project to remove infrastructure from the “A fields” in the Southern North Sea off the north Norfolk coast. In total, nearly 9,000 tonnes of infrastructure will be removed, including 2,300 and 2,100-tonne platforms.

The Oil & Gas UK report also examined two scenarios for Brexit trade – if the UK reverts to World Trade Organisation rules it says it would add an extra £500m to trade costs, while a more favourable trading model could save £100m.

Five things we learnt from the Oil and Gas UK economic report

1. Oil and gas is still expected to make up two thirds of the UK’s primary energy supply by 2035, according to the Department for Business, Energy and Industrial Strategy.

2. Despite a 60,000 fall in direct and indirect jobs supported by the sector it still accounts for employing 300,000 people across the UK.

3. The UK oil and gas supply chain exports £12bn of goods and services to other basins around the world.

4. Brexit could cost the industry £500m in direct trade costs if Britain reverts to World Trade Organisation rules, coming to a total of £1.1bn, but could save it £100m in the best case scenario.

5. The price of production per barrel of oil has reduced from $29.7 to $15.3 in just two years.

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